Growth, regula­tion, innova­tion – July update in the water sector

Political decis­ions: Regula­tion is becoming incre­a­singly important

In July, there were signs of incre­a­sing political priori­tization of water security world­wide. In the US, there is growing bipar­tisan support for new legis­la­tive initia­tives. The reintro­duced Healthy H20 Act provides funding for water testing and treat­ment in rural areas, parti­cu­larly to protect against PFAS, lead, and nitrates. At the same time, the PFAS National Drinking Water Standard Act is gaining importance—a bill that would intro­duce nation­wide limits for these persi­stent chemicals for the first time.

Canada has initiated a struc­tural realignment with the estab­lish­ment of a National Water Agency, funded by the C$650 million Freshwater Action Plan. The aim is to centra­lize water policy and invest­ment in climate-resilient infras­truc­ture.

Water is also incre­a­singly in focus in Europe. The EU’s budget planning from 2027 onwards priori­tizes invest­ments in water-related resili­ence and effici­ency. In the UK, regulator OFwat is conti­nuing its sanctions practice and propo­sing a £24 million penalty package against South West Water – a response to repeated viola­tions that is also trigge­ring infras­truc­ture moder­nization.

Company results: Stabi­lity and growth momentum

Despite a challen­ging economic environ­ment, many compa­nies in the water sector proved resilient.

• Xylem impressed with organic revenue growth of 6% and an EPS increase of 16%. Strong demand across all business segments highlighted the strategic role of the water infras­truc­ture segment in parti­cular.
• Mueller Industries posted a record quarter with revenue growth of 14% and EPS of US$2.22. Manage­ment parti­cu­larly highlighted the strategic role of the water infras­truc­ture segment.
• Webuild reported revenue growth of 22%, driven by urbanization and the energy transi­tion. Parti­cu­larly noteworthy is the progress made in the construc­tion of Latin Ameri­ca’s largest waste­water treat­ment plant.
• Veralto combined a 6.4% increase in revenue with double-digit EPS growth and also invested EUR 20 million in a techno­logy fund for innova­tive water solutions.
• Sulzer achieved 6.3% revenue growth in the first half of the year with an EBITDA margin of 14.4%. The Flow Equip­ment division, which also includes water markets, recorded growth of 10%. The “Sulzer Excel­lence” strategy conti­nues to show results.

Techno­lo­gical progress and innova­tion momentum

Innova­tion in the water sector remains strong. In the UK, Southern Water is imple­men­ting an AI-based system for predic­tive mainten­ance of over 3,500 waste­water pumps. The aim is to prevent technical failures through real-time monito­ring and machine learning – an example of practical digita­lization.

In the US, New York City has launched a Water Tech Incubator to test new infras­truc­ture solutions during ongoing opera­tions. The focus is on integra­ting innova­tive techno­lo­gies into municipal water systems – a model for successful public-private partner­ships.

In addition, the Inter­na­tional Water Associa­tion (IWA) and the Inter­na­tional Society for Trenchless Techno­logy have joined forces to promote trenchless pipe rehabi­li­ta­tion techni­ques. These techno­lo­gies enable efficient network renewal with minimal disrup­tion – a high-growth segment in view of globally ageing infras­truc­ture.

Climate adapt­ation and ESG: water in the context of change

Incre­a­sing water scarcity as a result of climatic extremes is bringing the issue of resili­ence to the fore. With its Water Resili­ence Strategy, the EU is pursuing targeted measures to promote reuse, storage and effici­ency.

Utili­ties are also taking action: In England, Yorkshire Water intro­duced watering bans and subse­quently recorded a 10% drop in water consump­tion. Uisce Éireann, Ireland’s national water autho­rity, presented a long-term infras­truc­ture plan for 2050 with a focus on sustaina­bi­lity and security of supply.

At the same time, invest­ment in ecolo­gical moder­nization is on the rise: Severn Trent is investing £24 million in improved phosphate reduc­tion at its Worce­ster site. South West Water is spending £20 million on the renova­tion of overflow facili­ties – a conse­quence of regula­tory requi­re­ments that will contri­bute to ecolo­gical impro­ve­ment in the long term.

On a global level, Veolia was awarded the contract to build the most advanced industrial water recycling plant in Brazil – a pionee­ring project to combat water stress.

Conclu­sion

July has once again shown that water remains an essen­tial resource with growing economic relevance. Between regula­tory change, techno­lo­gical innova­tion, and ESG-driven invest­ments, the water sector offers sustainable oppor­tu­ni­ties – for the environ­ment, society, and capital.